Managing director Vichit Buasri said the investment would increase the company's production capacity from 3 million units per year to 3.5 million units. The new production system is expected to begin operating in the fourth quarter of this year.

He said that the company has decided to develop its production technologies in order to reduce raw material costs, which mainly come from lead.

The price of lead has increased considerably, from about US$450 (Bt15,800) per tonne three years ago to $1300 a tonne last year. At present, it costs around $1,800 to $1,900 a tonne.

The price of lead will continue to rise due to speculation in the global market and huge demand from industries in China, he said.

However, Siam GS is not yet planning to raise its product prices because it raised them as recently as last October.

GS battery prices are 5-10 per cent higher than other brands on the domestic market, said Siam GS Sales managing director Krirkkij Ruangpitaporn.

"Although our batteries are the most expensive on the domestic market, we provide best-quality products. We won't compete in terms of price," he said.

GS is aiming for Bt5.6 billion in revenues this year, of which Bt3.4 billion will come from Siam GS Battery and the rest from Siam GS Sales.

Last year, Siam GS Battery recorded revenues of Bt3.1 billion, an increase of 27 per cent from the year before. It supplies batteries to Siam GS Sales and automotive manufacturers such as Nissan, Toyota, Isuzu and Mazda. It also exports to Japan, Malaysia, Laos, Burma, Cambodia and the Philippines.

Meanwhile, Siam GS Sales, which is responsible for retail sales via distributors throughout Thailand, posted revenues of Bt1.8 billion last year, up 22 per cent from 2005.

It has 150 distributors nationwide and plans to boost the number to 200 this year, Krirkkij said.

Chalida Ekvitthayavechnukul

The Nation